2008 Woodie Awards
U.S. Economy Fails Consumers
Consumers afraid to spend because of dwindling economy, San Jose University survey reports.
Tiffany Farmakis
Issue date: 9/8/04 Section: News
- Page 1 of 1
Four out of 10 Californians expect the country will enjoy financially good times in the coming year as compared to the 51 percent who expressed that view in January, according to the recent California Consumer Confidence Survey from San Jose State University.
"Two - thirds of the American economy is driven by consumers, and overall, California consumers are not wildly optimistic that the economy is recovering," Phil Trounstine, director of the Survey and Policy Research Institute, said in a July press release.
This dim outlook is also reflected in the nation's statistics. Consumer confidence throughout the country plummeted for the month of August, breaking four straight months of gains, as sluggish job growth and rising gas prices weighed on public sentiment.
"With the gas prices being so high, the lackluster job market and the relentless political ads gnawing away at everyone, it's no wonder that no one has any confidence in the economy," liberal arts major, Dina Zavalaiga said.
The Consumer Confidence Index fell more than seven points to 98.2 from a revised reading of 105.7 in July, according to a report from The Conference Board. The reading was significantly lower than the 103.5 that analysts had expected, and was the lowest since May, when it registered at 93.1.
Consumer spending had rebounded sharply in July, sustaining hopes that the U.S. economy was recovering from its recent soft spot.
"The recent sharp jump in June and July [in consumer confidence] may have showed an overstatement in confidence," said Lynn Reaser, chief economist at Bank of America Capital Management in a news statement. "Consumer confidence has improved from a year ago, but consumers are cautious about the present and future of the economy."
It is said that an increased caution about the outlook for jobs also helped contribute to the decline. The employment outlook for the next six months is dismal.
Consumers expecting fewer jobs increased to 15.4 percent from 13.5 percent. Those anticipating more jobs to become available fell to 16.2 percent from 19.5 percent. Consumers expecting their incomes to improve in the months ahead rose to 19.3 percent from 18.0 percent last month.
"It's hard to get a decent full-time job because people are afraid," business administration major, Evelyn Chacon said. "They're afraid to leave their lesser paying jobs because they know there are no higher paying jobs available."
This index was the latest in a series of disappointing economic reports.
Whether the drop in consumer confidence is an indication that the US economy is slowing again or just a delayed reaction of the soft spot the economy hit this summer isn't clear. However, analysts are saying it is clear that consumers are taking note of the slowing pace of growth.
"The responses on confidence suggest the view that things have stopped getting better rather than things are getting worse," said Drew Matus, senior financial economist at Lehman Brothers. "The economy is not collapsing, it's just that the pace of growth has slowed enough that people have noticed it."
"Two - thirds of the American economy is driven by consumers, and overall, California consumers are not wildly optimistic that the economy is recovering," Phil Trounstine, director of the Survey and Policy Research Institute, said in a July press release.
This dim outlook is also reflected in the nation's statistics. Consumer confidence throughout the country plummeted for the month of August, breaking four straight months of gains, as sluggish job growth and rising gas prices weighed on public sentiment.
"With the gas prices being so high, the lackluster job market and the relentless political ads gnawing away at everyone, it's no wonder that no one has any confidence in the economy," liberal arts major, Dina Zavalaiga said.
The Consumer Confidence Index fell more than seven points to 98.2 from a revised reading of 105.7 in July, according to a report from The Conference Board. The reading was significantly lower than the 103.5 that analysts had expected, and was the lowest since May, when it registered at 93.1.
Consumer spending had rebounded sharply in July, sustaining hopes that the U.S. economy was recovering from its recent soft spot.
"The recent sharp jump in June and July [in consumer confidence] may have showed an overstatement in confidence," said Lynn Reaser, chief economist at Bank of America Capital Management in a news statement. "Consumer confidence has improved from a year ago, but consumers are cautious about the present and future of the economy."
It is said that an increased caution about the outlook for jobs also helped contribute to the decline. The employment outlook for the next six months is dismal.
Consumers expecting fewer jobs increased to 15.4 percent from 13.5 percent. Those anticipating more jobs to become available fell to 16.2 percent from 19.5 percent. Consumers expecting their incomes to improve in the months ahead rose to 19.3 percent from 18.0 percent last month.
"It's hard to get a decent full-time job because people are afraid," business administration major, Evelyn Chacon said. "They're afraid to leave their lesser paying jobs because they know there are no higher paying jobs available."
This index was the latest in a series of disappointing economic reports.
Whether the drop in consumer confidence is an indication that the US economy is slowing again or just a delayed reaction of the soft spot the economy hit this summer isn't clear. However, analysts are saying it is clear that consumers are taking note of the slowing pace of growth.
"The responses on confidence suggest the view that things have stopped getting better rather than things are getting worse," said Drew Matus, senior financial economist at Lehman Brothers. "The economy is not collapsing, it's just that the pace of growth has slowed enough that people have noticed it."
